Prefecture mulling tax on car rentals

A prefectural committee has started discussions on levying a new tax on car rentals. The new tax would be a part of proposed new taxes on tourism. Officials say new taxes are needed to pay for upkeep and improvement of tourism related infrastructure that has become under increasing stress with the explosive increase in the number of visitors to the prefecture.

The other tourism related taxes under consideration are entry tax, lodging tax and now also a special tax for car rentals.

The prefectural tourism tax reviewing committee held the first meeting regarding the proposed new taxes on Sep. 10th at the Okinawa Prefectural Office. In addition to the members of the committee, representatives of the tourism industry and related companies were also invited to the meeting, which discussed about ways to collect the tax and how much the appropriate levy should be. The aim is to start collecting the taxes from fiscal 2021.

The idea of taxing visitors is not new, but discussion on the subject was stopped in 2013 because of the so called Lehman shock that affected business sentiment worldwide, downturn in the number of visitors from China due to the territorial dispute over the Senkaku Islands and the Japanese consumption tax hike that all were affecting the tourism business negatively.

However, the number of tourists has grown from 6,580,000 in 2013 to 9,580,000 in 2017, and the number of hotel stays and rental cars has gone up accordingly.

Tokyo and Osaka are already collecting entry tax from visitors to the cities, and in Okinawa, Taketomi Town has decided has decided to enact an entry tax for visitors from 2019.